after reading the forbes news report and then investigating coinvalidation themselves.. i have come to this conclusion

never take whats written on the news as gospel.. (a lesson i learned way back, but recently got reminded)
secondly, there is alot of hysteria without much investigation by people.

so here it is short ans sweet.
coinvalidation are not government. they cannot freeze, seize funds
coinvalidation are just business advisors with a data base.
coinvalidation cannot make it a requirement to use their service. they are a business. people are free to choose to use it or not.

now lets talk about this database.
this database will not store every public key and eventually link it to users.
it will however list pubkeys of businesses that are fully fincen compliant and also seek out to list blackmarket addresses, again i highlight businesses not personal keys.

think of it like a santas "naughty or nice list" for BUSINESSES not individuals.

coinvalidation is not seeking to get every USERS identification , much like the government does not request everyone to write their name and zipcode on every bank note they spend. all its for is to increase the ability to see the source of funds. much like banks look at serial numbers of bank notes to see if they come up with flags that funds once got blacklisted/marked as part of a drugs cartel blackmarket

EG have funds come from a compliant exchange, or a blackmarket recently.

how will businesses use coinvalidation services.
(a) alpaca socks shop wont need to check TXID for its origins as they only accept small amounts, meaning low risk and no need for the AMLKYC stuff
(b) real estate agent will check every TXID for its origins due to higher value transactions. and if within 3 hops they notice a legitimate bitstamp address, great no risk. if its silkroad with 3 hops *, then the real estate agency will assess the risks of money laundering and do all the fincen checks required of them and report to fincen if serious crime criteria is met.


parts of finCEN require compliant members to:
do AMLKYC on customers transactig over $10k
monitor for serious crimes.

now a serious crime is NOT selling a dimebag of weed for $20 of bitcoin. a serious crime is a druglord with over $10k of funds for instance. or a murderer for hire, etc etc

so for businesses to monitor serious crimes they need to look out for large amounts of money that come pretty much directly * from drug websites for instance. small amounts like $20-$100 or even $1000 can be weighed up by the business as a low medium or high risk themselves.
*businesses will decide how many hops are deemed high/low risk for validation checks as part of their own policy handbooks

now then
all of this only applies to businesses that have to deal with FIAT exchanging for customers and its purely about sniffing out large transacting serious crimes and tax evaders. so all those businesses that dont do customer FIAT-bitcoin transactions dont need compliance. but businesses that do handle FIAT on behalf of customers do.

so chill out on the hysteria. bitcoin anonymity wont change, infact the FINCEN regulations wot/havnt changed in decades. the only difference is that coinvalidation will make it easier for bitstamp to recognise a 1-2-3-4-or 5 hop TXID as coming from a notorious website to then assess the requirement to report it to fincen.